A Primer on Costly Propositions
By Susan Shelley
Three propositions on the November ballot could end up costing California residents a lot of money, even though that’s not immediately apparent from the official titles and summaries that describe them.
In this week’s Howard Jarvis Podcast, Jon Coupal, president of the Howard Jarvis Taxpayers Association, joins me for a discussion of these costly and even sneaky measures.
Proposition 15 would raise property taxes for California businesses. Businesses that rent their space will get hit with the higher costs, too – that’s because standard leases for commercial property require the tenant to pay the costs of maintenance, insurance and property taxes as well as the rent.
So even the smallest businesses will see huge increases in their operating costs. Proposition 15 takes away the protection of Proposition 13, the 1978 initiative that limited annual increases in property tax assessments to a maximum of 2 percent per year. Under Proposition 15, properties used for commercial and industrial purposes would be reassessed to market value, and not just once but every three years. The owner would owe 1 percent of that current market value every year in property taxes.
Those sharply higher costs will be passed through to tenants and to customers. Proposition 15 will increase consumer prices, raising the cost of living in California. Of course, the title and summary on the ballot don’t tell you that. But the Howard Jarvis Taxpayers Association just did.
Another costly proposition that’s hiding a huge increase in costs is Proposition 19. From the title and summary, not to mention the TV commercials, this appears to be some sort of assistance for wildfire victims, seniors and the disabled. What’s hiding in the fine print is a billion-dollar tax increase on properties that are transferred between parents and children. Under current law – actually, it’s in the state constitution – a home of any value plus up to $1 million of assessed value of other property, such as a small business, a duplex or a rental home, may be transferred between parents and children without being reassessed to current market value. This keeps the property tax bill the same.
However, Proposition 19 repeals this protection. All property transferred between parents and children would be reassessed to market value as of the date of transfer, which is sometimes the date of a parent’s death. On this sad occasion, children who inherit a home or other property will get a new tax bill for 1 percent of the current market value of the property. The only exception is for a primary residence if the person to whom it is transferred moves in within a year. Business properties lose the protection completely.
A third proposition could indirectly lead to higher taxes. Proposition 18 would lower the voting age to 17 in primaries and special elections for any eligible voter who will turn 18 by the general election in November. This will allow high school students to vote on tax increases, which frequently are placed on primary and special election ballots by school districts.
It’s possible that students will be presented with a one-sided view of those measures during school hours. School districts and public agencies often spend public funds on “informational” campaigns that promote a favorable view of the tax-increase measures on the ballot. Public officials campaign, too. Before the March 3, 2020, primary, Gov. Gavin Newsom and Secretary of State Alex Padilla campaigned personally at one school to promote a $15 billion statewide school bond.
That bond measure, which coincidentally was numbered, “Proposition 13,” went down to defeat after the Howard Jarvis Taxpayers Association ran radio ads statewide to explain to voters that it was likely to raise property tax bills.
Voters listened. Check out the Howard Jarvis Podcast and you’ll know why the Howard Jarvis Taxpayers Association is the most influential taxpayer advocacy organization in California.
Susan Shelley is Vice President, Communications, of the Howard Jarvis Taxpayers Association.